The bottom line keeps growing.

OnWallStreet’s annual ranking of the wealth management industry’s top wirehouses and regional broker-dealers shows continued growth at the wirehouses and regional broker-dealers in the employee advisory channel. But these companies still face challenges growing their business. In previous years, mergers and acquisitions did a lot for enlarging advisor ranks and revenues for most players. More recently, however, M&A activity has slowed. Analysts say that the slower pace is due, in part, to slim options.

“There are broker-dealers out there, but they may not pass the sniff test,” says Alois Pirker, an analyst at Aite Group.

In addition, wirehouses like Morgan Stanley have grown so large through mergers that further acquisitions could result in market overlap, industry observers say. Yet wirehouses and regionals still need to grow, and most firms are looking for ways to keep the momentum going.


Royal Bank of Canada, for example, rapidly grew its footprint in the U.S. market through a number of acquisitions starting in 2000. The moves resulted in a roughly 2,000-advisor firm that ranks seventh largest by headcount in OnWallStreet’s annual broker-dealer rankings.

Following impressive second-quarter earnings earlier this year in which the firm reported roughly 15% profit growth, current president and incoming Royal Bank of Canada CEO David McKay indicated that the firm wanted to grow its wealth management and capital markets businesses in the U.S. through organic growth and acquisitions.

Analysts say that the moves would be a good fit, as they would allow RBC to diversify its business to be less reliant on the Canadian market, where the company is the leader.

“It makes sense because the U.S. economy is recovering and there’s a lot more wealth,” says Brian Klock, an analyst at Keefe Bruyette & Woods.

Moreover, wealth management has become increasingly attractive to a number of big banks because it is seen as high return and low risk, requiring lower capital requirements.

“If you think of larger banks, they all have much stricter capital requirements now. So they are looking to move from a proprietary model to an agency mode where they mostly manage someone else’s money,” says Paul Goldberg, an analyst at Portales Partners.

John Taft, CEO of RBC Wealth Management-U.S., stresses that the firm would boost advisor productivity.

“We’ve placed our chips on the strategic premise that we can achieve the topline revenue growth goals and the bottom-line growth goals that RBC has for the U.S. by increasing the productivity of advisors on our platform. That’s the single most important initiative we’ve had and will have going forward,” he says.

RBC is achieving this, Taft says, through improvements in practice management, technology upgrades, advisor teaming and moving more client assets onto an advisory platform. Of the latter, he acknowledges that the entire industry is moving in that direction.

“We’re no different than anyone else. We’ve been encouraging our advisors to do more as an investment advisor instead of a transaction-based broker,” explains Taft.

He adds, “Quite frankly, it generates better results and better client outcomes.”

Taft claims the efforts are paying off. Although he declined to give specifics about productivity numbers, he said productivity per advisor has risen more than 50% from 2009 to 2013.

Image: John Taft, CEO of RBC Wealth Management-U.S. Photo: Michael Haug.



UBS is in the process of transforming itself into a more comprehensive wealth manager. But executives acknowledge that its 7,000 advisors won’t get the job done overnight.

“Transformation in and of itself denotes that it’s going to take some time. Otherwise we’d call it wealth management revolution,” says Bob Mulholland, head of the client advisory group at UBS, which is no. 4 in the wirehouse headcount rankings.

UBS is providing advisors with support and training to secure its future as a comprehensive wealth manager. UBS has begun expanding an advisor training program that launched in pilot mode last year. Trainees in the two-year program begin as wealth planning analysts, work toward their CFP designation, and operate in a team setting to learn how to serve the full range of client needs.

Analysts say that focusing training programs in this manner makes sense as firms move to a more comprehensive wealth management service model.

“They’re all branding it a little differently, but they’re all gearing toward the same thing,” notes Jeff Spears, CEO of Sanctuary Wealth Services. “When you recruit people, you’re recruiting people who are successful in the old business model. When you’re training people, you’re training them to succeed in the new business model.”

And to further boost revenues, UBS is aiming to grow its lending business and mortgage offerings. UBS Group Americas CEO Bob McCann told investors at a UBS conference in May that this will be a major pillar of growth for the firm. UBS has already expanded mortgage lending from $100 million in 2009 to $6.7 billion at the end of 2013.

At the end of the first quarter, 26% of UBS’s advisors had sold two or more mortgages within the preceding 12 months. McCann wants that figure to double.

“Lending is critical to the future growth of WMA. In fact it is one of the single biggest opportunities we have at UBS Americas,” he points out. “Lending to wealth management clients is a high-margin business and results in deeper client relationships, higher advisor productivity and improved profitability.”


UBS rivals like Bank of America Merrill Lynch, which topped OWS’ list of wealth managers by revenue, are aiming to boost advisor productivity through large-scale technology upgrades.

“We’ve been making a lot of investment in productivity tools to make our advisors much more efficient and to spend more time with clients and prospective clients,” says John Thiel, head of U.S. wealth management and the private banking investment group.

In May the firm launched Merrill Lynch Clear, an iPad app that advisors will use when meeting with clients to identify their retirement priorities, such as family, travel and inheritance. The app uses interactive graphics and research to ascertain costs and determine how to meet goals. Initially geared toward baby boomers, executives expect that Merrill’s roughly 13,000 advisors will eventually use the new technology when meeting with clients of all ages.

“They want to talk about their life priorities. We assume as an industry that people have goals. If you ask them about their family, their leisure, they light up,” says Thiel. “What we’ve done with Clear is identify those priorities. Based on our research, our conversations with clients, they’ve made it clear that is what they want to talk about.”

The firm is also upgrading and combining its platforms into a single advisor workstation, Merrill Lynch One. Andy Sieg, head of global wealth and retirement solutions, says that the $100 million project is proving to be a vital tool for Merrill advisors. It’s replacing what Sieg acknowledges was a byzantine system built piecemeal over time.

“You can’t simply make Band-Aids or minor enhancements to these investment advisor programs. You need to be bold pulling them up by their roots and replacing them with a platform that enables advisors to make use of the full range of investment products that they want to use,” he argues.

However, experts say the real technology upgrades are in the independent space.

“The independents, who are not tied to any institution, can more easily adopt the latest and greatest,” says Timothy Welsh, president of Nexus Strategy, a technology consulting firm.

Sieg counters that the technology upgrades need to be understood in context of the firm’s bigger strategy.

“You should think about them as very broad areas of innovation where we are bringing together new technology, new content and new advisor interaction models to make Merrill Lynch as compelling as we’ve been for many years with our clients going forward,” he says.


Regional players like Los Angeles-based Wedbush see technology as a retention and even a recruitment tool. “We think the wealth management platform is going to help us attract more advisors to the firm,” says Wes Long, head of private client services.

The 400-advisor firm, which ranked 12th among industry leaders in headcount this year, supplies ongoing training and support to its advisors to help transition them to the newest technology platforms; these support a more holistic approach to client finances.

“It’s a huge benefit for the clients in terms of how we can educate them and put it together for them, and for the advisor in terms of efficiency and building a portfolio,” says Long.


Although reaching new growth targets for the top and bottom lines isn’t easy, executives and advisors will keep striving. A new acquisition, an expansion in mortgage sales or a critical tech upgrade may create a new leader for next year’s rankings. The race to the top isn’t over.

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